How to deal with emotions in financial markets

How to deal with emotions in financial markets


Deep-Gajbe,-Director,-Imperial-Money-

Deep Gajbe, Director, Imperial Money

The people who follow financial media have been aware of the China scare, Evergrande, commodity crash, market corrections and expensive PE as well as the market bahot mahanga hai concept. The media pays more attention to the financial sector when things get tough.

If media did not make the stories, how would you watch them or read them? this is as good as Agnipath. Reactions by stories may cause irreversible damage to one’s wealth creation goals and objectives.

In my experience,earning money from equity is simple but not easy. Adding value to the portfolio is another difficult task largely because,when its cheap investor feel, “Aur girne wala hai, intajar karte hai”, because jab chij sasti milati hai to Dil Hai Ki Manata Nahi because of Darr.

What is market? We feel you and I is market, as long as human on the earth, markets will be existing. How is India markets positioned presently?

India’s share market capitalization is expected to propelling to $5 trillion by 2024 from the current $3 trillion, making it the fifth-largest in the world. Nearly $400 billion of market capitalization could be added from new IPOs over the next 2-3 years wrote in a note. Share-sale pipeline is expected to remain robust over the next 12-24 months, based on recent announcements from ‘new economy’ unicorns –Source Bloomberg Quint.

As the cyclical recovery is expected to be strong & flows to support it, we remain overweight on our medium-term constructive view. Furthermore, the strong thematic appeal and growth potential of the new economy sectors underpin our outlook.if we miss this opportunity then Zindagi na milegi dobara.

Managing volatility and ourselves means we have to learn how to ignore world concerns.We have never experienced a time when nothing else was happening,which is very rare. You need to become Bahubali.

If you have emotional maturity, creating wealth is not difficult.Making money is not difficult; managing emotions are far more challenging. A person without emotional maturity is less likely to create wealth, but they can also lose it. It can be accomplished by following few basic steps –Taare Zameen Par.

There is great similarity in graphs of markets & heart beat so we have to decide whether we need to be in the alive asset class or flat or dead asset class, Jinda Hu Mai.

The 4 key tenets of wealth creation are 1) Long term orientation, 2) Patience 3) Discipline 4) Timely Asset allocation

Even sometimes up to 4 and half year time there are no returns and all of sudden in the last 180 days of 5th year you get 20% CAGR

India would grow and do very well in the next few decades. Consumption of 135 cr. Population is improving, the cost of living is increasing day by day, this speaks the story of goods and services will attract more profits and build the better ROCE in the books of high-quality companies, however you need to decide that how this profit has to come in your pocket via shares of those companies or via mutual funds route in your portfolio.That’s true like PK.

This would get reflected on corporate performance and hence stock markets. If you can get this broader picture correct, then why worry about day-to-day news or short-term outlook?

Successful investors take a broad view of the future and learn to ignore every day volatility.Equity is for you only if you have faith in the future.As I have pointed out with data,only a small percentage gets rich from markets.These are the ones who have patience to live through ups and downs,follow investment discipline irrespective of bull and bear markets and stay invested for decade or decades.

For most of us, equity is the only way to create financial independence.Just Bhag Milkha Bhag. Getting rich from the market has never been easy.

I’m trying to ensure that all of you create huge wealth from markets in the long run. If you can stay long, wealth creation would automatically be taken care of. This is the real story of Market Baghban.

Views are personal: The author is Deep Gajbe,Director, Imperial Money,Nagpur

Disclaimer: The views expressed are of the author and are personal. TAML may or may not subscribe to the same.The views expressed in this article / video are in no way trying to predict the markets or to time them.The views expressed are for information purpose only and do not construe to be any investment, legal or taxation advice.Any action taken by you on the basis of the information contained herein is your responsibility alone and Tata Asset Management will not be liable in any manner for the consequences of such action taken by you.

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